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Audit Committee Progress Report and Update
Mid Devon District Council
Year ended 31 March 201721 March 2017
Geraldine Daly
Engagement Lead
T 0117 305 7741
Steve Johnson
Audit Manager
T 0117 057 868
Victoria Redler
Executive
T 0117 305 7741
Audit Committee progress report and update – Mid Devon District Council
2© 2017 Grant Thornton UK LLP. All rights reserved.
The contents of this report relate only to the matters which have come to our attention, which we believe need to be
reported to you as part of our audit process. It is not a comprehensive record of all the relevant matters, which may
be subject to change, and in particular we cannot be held responsible to you for reporting all of the risks which may
affect your business or any weaknesses in your internal controls. This report has been prepared solely for your
benefit and should not be quoted in whole or in part without our prior written consent. We do not accept any
responsibility for any loss occasioned to any third party acting, or refraining from acting on the basis of the content
of this report, as this report was not prepared for, nor intended for, any other purpose.
Audit Committee progress report and update – Mid Devon District Council
3© 2017 Grant Thornton UK LLP. All rights reserved.
Introduction
Members of the Audit Committee can find further useful material on our website www.grant-thornton.co.uk, where we have a
section dedicated to our work in the public sector. Here you can download copies of our publications:
• CFO Insights – reviewing council's 2015/16 spend (December 2016); http://www.grantthornton.co.uk/en/insights/cfo-
insights-reviewing-councils-201516-spend/
• Fraud risk, 'adequate procedures', and local authorities (December 2016);
http://www.grantthornton.co.uk/en/insights/fraud-risk-adequate-procedures-and-local-authorities/
• New laws to prevent fraud may affect the public sector (November 2016);
http://www.grantthornton.co.uk/en/insights/new-laws-to-prevent-fraud-may-affect-the-public-sector/
• Brexit: local government – transitioning successfully (December 2016)
http://www.grantthornton.co.uk/en/insights/brexit-local-government--transitioning-successfully/
If you would like further information on any items in this briefing, or would like to register with Grant Thornton to receive
regular email updates on issues that are of interest to you, please contact either your Engagement Lead or Engagement
Manager.
This paper provides the Audit Committee with a report
on progress in delivering our responsibilities as your
external auditors.
The contents of this report relate only to the matters which have come to our attention, which we believe need to be
reported to you as part of our audit process. It is not a comprehensive record of all the relevant matters, which may
be subject to change, and in particular we cannot be held responsible to you for reporting all of the risks which may
affect your business or any weaknesses in your internal controls. This report has been prepared solely for your
benefit and should not be quoted in whole or in part without our prior written consent. We do not accept any
responsibility for any loss occasioned to any third party acting, or refraining from acting on the basis of the content
of this report, as this report was not prepared for, nor intended for, any other purpose.
Audit Committee progress report and update – Mid Devon District Council
4© 2017 Grant Thornton UK LLP. All rights reserved.
Progress at March 2017
2016/17 work Planned Date Complete? Comments
Fee Letter We are required to issue a 'Planned fee letter for 2016/17' by the
end of April 2016April 2016 Yes The 2016/17 fee letter was issued on 18 April 2016 and considered by
the 31 May 2016 committee.
Accounts Audit PlanWe are required to issue a detailed accounts audit plan to the
Council setting out our proposed approach in order to give an
opinion on the Council's 2016-17 financial statements.
21 March 2017 Yes The Audit plan is on the agenda for this meeting.
Interim accounts audit Our interim fieldwork visit plan included:
• updated review of the Council's control environment
• updated understanding of financial systems
• review of Internal Audit reports on core financial systems
• early work on emerging accounting issues
• early substantive testing
• Value for Money conclusion risk assessment.
February 2017 Yes Our interim audit was completed in the three weeks ending 3rd March
2017.
We have undertaken all the required planning and preparation,
together with such early testing we deemed efficient.
The work included early discussions over the accounting treatment of
the Council’s planned property transactions, in particular the Premier
Inn acquisition of land.
Final accounts auditIncluding:
• audit of the 2016/17 financial statements
• proposed opinion on the Council's accounts
• proposed Value for Money conclusion
• review of the Council's disclosures in the consolidated accounts
against the Code of Practice on Local Authority Accounting in
the United Kingdom 2015/16
To commence 30
May 2017
No Not yet started.
The council’s special Audit Committee is set for Monday 17th July. In
order that we can sign the audit opinion on that date, the period for
Public Inspection will need to commence on the 5th June (30 working
days ahead of signing). MDDC will need to put on their website by
midnight on Sunday 4th June.
Audit Committee progress report and update – Mid Devon District Council
5© 2017 Grant Thornton UK LLP. All rights reserved.
Progress at March 2017
2016/17 work Planned Date Complete? Comments
Value for Money (VfM) conclusionThe scope of our work is unchanged to 2015/16 and is set out in the final guidance issued by the National Audit Office in November 2015. The Code requires auditors to satisfy themselves that; "the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources".
The guidance confirmed the overall criterion as; "in all significant respects, the audited body had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people".
The three sub criteria for assessment to be able to give a conclusion overall are:
• Informed decision making
• Sustainable resource deployment
• Working with partners and other third parties
Initial risk
assessment
completed 3rd
March 2017
Conclusion will be
given 17 July
2017
No We have identified one risk.
The Council is forecasting an overspend of £64k for 2016/17; a budget
for 2016/17 that is balanced using £89k of New Homes Bonus, and
whose future is uncertain as the preliminary grant settlement shows the
elimination of Revenue Support Grant by 2019/20. The MTFP shows a
deficit of £419k in 17/18 which increases annually, peaking at £975k in
2020/21. Without any action the General Fund reserve of £2.2m would
become overdrawn by £1.25m over the life of the plan.
The results of our VfM audit work and the key messages arising will be reported in our Audit Findings Report and in the Annual Audit Letter.
We will include our conclusion in our auditor's report on your financial statements which we will give on 17 July 2017.
Grant claims and certification.We anticipate that we will be required to
certify the Council's 2015/16 Housing benefit and council tax
subsidy claim.
June 2017 to
November 2017.
Not yet due The work on the 2016/17 claim will be completed by 30 November
2017.
Other areas of work Audit of:
Pooling of Housing capital receipts claim
Housing & Communities agency claim
Meetings with Members, Officers and others
October 2017
On-going
No
No
Not yet started
Regular meetings arranged with Officers.
Technical Matters
Audit Committee progress report and update – Mid Devon District Council
7© 2017 Grant Thornton UK LLP. All rights reserved.
Highways network asset On 14 November CIPFA/LASAAC announced a deferral of the move to
measuring the Highways Network Asset ('HNA') at depreciated replacement cost
in local authority financial statements for 2016/17. This is due to delays in
obtaining updated central rates information that was required for the valuations.
CIPFA/LASAAC will issue an Update to the 2016/17 Code of Practice on Local
Authority Accounting in the United Kingdom to confirm this decision once it
has completed the full due process before publication. CIPFA/LASAAC will
review this position at its meeting in March 2017 with a view to implementation
in 2017/18 and will consider whether central rates and the central assurance
processes will be delivered in a timely manner to allow successful
implementation. It expects that the 2017/18 Code will be on the same basis as
planned for 2016/17, i.e. not requiring restatement of preceding year
information.
In August, CIPFA published the 'Code of Practice on the Highways Network
Asset (2016 Edition)' and additional guidance to aid the implementation process.
Telling the story – Changes in 2016/17 CIPFACode
CIPFA has been working on the 'Telling the Story' project, which aims to streamline the
financial statements and improve accessibility to the user. This has resulted in changes to
CIPFA's 2016/17 Code of Practice on Local Authority Accounting in the United
Kingdom ('the Code').
The main changes affect the presentation of the Comprehensive Income and Expenditure
Statement ('CIES'), the Movement in Reserves Statement ('MIRS') and segmental
reporting disclosures. A new Expenditure and Funding Analysis has been introduced.
The key changes are:
• the cost of services in the CIES is to be reported on basis of the local authority's
organisational structure rather than the Service Reporting Code of Practice
(SERCOP) headings
• an 'Expenditure & Funding Analysis' note to the financial statements provides a
reconciliation between the way local authorities are funded and the accounting
measures of financial performance in the CIES
• the changes will remove some of the complexities of the current segmental note
• other changes to streamline the current MIRS providing options to report Total
Comprehensive Income and Expenditure (previously shown as Surplus and Deficit
on the Provision of Services and Other Comprehensive Income and Expenditure
lines) and removal of earmarked reserves columns.
Other amendments have been made to the Code:
• changes to reporting by pension funds in relation to the format and fair value
disclosure requirements to reflect changes to the Pensions SORP
• other amendments and clarifications to reflect changes in the accounting standards.
Delivering Good GovernanceIn April, CIPFA and SOLACE published 'Delivering Good Governance in Local
Government: Framework (2016)' and this applies to annual governance statements
prepared for the 2016/17 financial year. The key focus of the framework is on
sustainability – economic, social and environmental – and the need to focus on the
longer term and the impact actions may have on future generations.
Local authorities should be:
• reviewing existing governance arrangements against the principles set out in
the Framework
• developing and maintaining an up-to-date local code of governance, including
arrangements for ensuring on-going effectiveness
• reporting publicly on compliance with their own code on an annual basis and
on how they have monitored the effectiveness of their governance
arrangements in the year and on planned changes.
The framework applies to all parts of local government and its partnerships and
should be applied using the spirit and ethos of the Framework rather than just rules
and procedures
The framework applies to all parts of local government and its partnerships and should be
applied using the spirit and ethos of the Framework rather than just rules and procedures.
The EL presented the changes to the AGS, in particular, at the SWAP and DAP meeting in
Somerset in October. This was attended by members of the Audit Committee including the
Audit Chair.
Sector issues and developments
Audit Committee progress report and update – Mid Devon District Council
9© 2017 Grant Thornton UK LLP. All rights reserved.
Local Government Finance SettlementThe final local government settlement for 2017/18 was
published on 20 February. The settlement reflects the
Government's aim that all councils will become self funding,
with central government grants being phased out. This is year
two of the four year offer, which has been accepted by 97%
of councils.
There is an expectation that councils will continue to improve
efficiencies with measures including further developments in
digital technology, new delivery models and innovative
partnership arrangements.
100% business rates retention
The announcement has an increased focus on business rates,
with the expectation that by the end of the current
Parliament, local government will keep 100% of the income
raised through business rates. The exact details of the
reforms are yet to be determined. This includes confirming
which additional responsibilities will be devolved to local
government and funded through these retained rates. Pilots
of the reforms are taking place across the country from April
2017.
The results of a recent Municipal Journal survey 2017 State of Local Government Finance have recently been published.
http://downloads2.dodsmonitoring.com/downloads/Misc_Fil
es/LocalGovFinance.pdf
Respondents expressed concern about the lack of detail in the
proposals, uncertainty around equalisation measures and the
scale of appeals.
Nearly 50% of Councils responding believe they will lose from
the transition to 100% retention of business rates. Views were
evenly split as to whether the proposals would incentivise local
economic growth.
Social Care Funding
Funding allocations reflect increased funding of social care with a
stated £3.5 billion of funding for social care by 2019/2020.
In this year's settlement £240 million of new homes bonus has
been redirected into the adult social care grant. In addition
councils are once again be able to raise the precept by up to 3%
for funding of social care.
Recognising that funding is not the only answer, further reforms
are to be brought forward to support the provision of a
sustainable market for social care. There is an expectation that all
areas of the country move towards the integration of health and
social care services by 2020.
Paul Dossett Head of Local Government in Grant
Thornton LLP has commented on the Government
proposals for social care funding (see link for full article).
"The government’s changes to council tax and the social care
precept, announced by the Secretary of State for DCLG as part of
the latest local government finance settlement, will seem to many
as nothing more than a temporary fix. There is real concern about
the postcode lottery nature of these tax-raising powers that are
intended to fund our ailing social care system."
“Our analysis on social care shows that the most deprived areas
in the UK derive the lowest proportion of their income from
council tax. "
“Conversely, more affluent areas collecting more council tax will
potentially receive a bigger financial benefit from these
measures.”
"Our analysis shows that the impact and effectiveness of the
existing social care precept is not equal across authorities. So any
further changes to tax raising powers for local government will
"Social care precept changes
will not help those living in
more deprived areas"
"The UK has a long tradition of
providing care to those who
need it most. If that is to
continue, the government must
invest in a robust social care
system that can cater for all
based on needs and not on
geography. From a taxpayer’s
perspective this is a zero sum
game. For every £1 not
invested in social care, the cost
to the NHS is considerably
more"
National developments
Links:
https://www.gov.uk/government/speeches/final-local-
government-finance-settlement-2017-to-2018
http://www.grantthornton.co.uk/en/news-centre/local-
government-financial-settlement-comment-social-care-
precept-changes-will-not-help-those-living-in-more-
deprived-areas/
http://www.grantthornton.co.uk/en/insights/council-tax-
alone-wont-solve-the-social-care-crisis/
not tackle the crisis of social care in our most
disadvantaged communities and arguably make
only make a small dent in the cost demands in
our more affluent communities."
Audit Committee progress report and update – Mid Devon District Council
10© 2017 Grant Thornton UK LLP. All rights reserved.
Pooling of LGPSFrom 1 April 2018 £200bn of assets from 90 LGPS
funds across England and Wales will be merged into
six ‘British Wealth Funds’. By pooling investment,
costs can be reduced through economies of scale and
through sharing of expertise, while the schemes can
maintain overall investment performance. Pension funds
will continue to be managed and maintained by the
separate administering authorities. The selection of fund
managers will be made by the investment pool operator
on behalf of a pool of co-operating administrative
authorities, while individual investment strategies,
including asset allocation, will remain the responsibility of
the individual administrative authority.
Potentially eight pools are to be established across the
country with total assets ranging from £13bn in both the
LPP and Wales pool, to £36bn in the Border to Coast
pool. It is expected that assets will be transferred to the
pools as soon as practicable after 1 April 2018.
Tasks to be completed by April 2018 include:
• creating legal structures for pools
• transferring staff
• creating supervisory boards/ committees
• obtaining FCA authorisations
• appointing providers
• assessing MiFID II implications
• determining pool structures for each asset type
The funds themselves will retain responsibility for:
• investment strategy
• asset allocation
• having a responsible investment strategy
• reporting to employers and members
Governance arrangements
There is no mandatory membership of oversight
structures. It is for each pool to develop the proposals
they consider appropriate. The majority of decision
making remains at the local level and therefore the
involvement of local pension boards in those areas would
not change. Scheme managers should consider how best
to involve their pension boards in ensuring the effective
implementation of investment and responsible investment
strategies by pools, which could include representation on
oversight structures.
CIPFA in the recent article Clear pools: the future of the
LGPS highlights the need for good governance
particularly in view of the complex web of stakeholders
involved in investment pooling,. Robust governance will
be vital to ensuring a smooth transition and continuing
operation of the funds
National developments
Challenge question:
• Is your Pension Fund
management keeping you up to
date with the developments in
respect of the Brunel Pooled
Fund?
Link:
http://www.cipfa.org/cipfa-
thinks/cipfa-thinks-
articles/clear-pools-the-future-
of-the-lgps?
typical structure of
LGPS Pool
Audit Committee progress report and update – Mid Devon District Council
11© 2017 Grant Thornton UK LLP. All rights reserved.
Fixing our broken housing marketDCLG published its housing White Paper on 7 February
2017. It opens with the statement:
“The housing market in this country is broken, and the
cause is very simple: for too long, we haven’t built enough
homes.”
It goes on to summarise three key challenges in the
housing market.
1. Over 40 per cent of local planning authorities do not
have a plan that meets the projected growth in
households in their area.
2. The pace of development is too slow. There is a large
gap between permissions granted and new homes
built. More than a third of new homes that were
granted planning permission between 2010/11 and
2015/16 have yet to be built.
3. The structure of the housing market makes it harder
to increase supply. Housing associations have been
doing well – they’re behind around a third of all new
housing completed over the past five years – but the
commercial developers still dominate the market.
The proposals in the White Paper set out how the
Government intends to boost housing supply and, over
the long term, create a more efficient housing market
whose outcomes more closely match the needs and
aspirations of all households and which supports wider
economic prosperity.
It states that the challenge of increasing housing supply
cannot be met by the government acting alone and
summarises how the government will work with local
authorities, private developers, local communities, housing
associations and not for profit developers, lenders, and
utility companies and infrastructure providers.
For local authorities, the government is:
• offering higher fees and new capacity funding to
develop planning departments, simplified plan-
making, and more funding for infrastructure;
• will make it easier for local authorities to take action
against those who do not build out once permissions
have been granted; and
• is interested in the scope for bespoke housing deals to
make the most of local innovation.
The government is looking to local authorities to be as
ambitious and innovative as possible to get homes built
in their area. It is asking all local authorities to:
• develop an up-to-date plan with their communities
that meets their housing requirement (or, if that is not
possible, to work with neighbouring authorities to
ensure it is met);
• decide applications for development promptly; and
• ensure the homes they have planned for are built out
on time.
The White Paper states that it is crucial that local
authorities hold up their end of the bargain. It goes on to
say that where local authorities are not making sufficient
progress on producing or reviewing their plans, the
Government will intervene. It also notes that where the
number of homes being built is below expectations, the
new housing delivery test will ensure that action is taken.
The White Paper goes on to consider in more detail:
• Planning for the right homes in the right places
• Building homes faster
• Diversifying the market
• Helping people now
National developments
Challenge questions:
• Have you been briefed on the
White Paper and the
implications for your statutory
housing function?
• Is the Council planning to
respond to the consulatation?
Consultation on the White Paper will begin on 7
February 2017. The consultation will run for 12
weeks and will close on 2 May 2017.
The White Paper is available at:
https://www.gov.uk/government/uploads/syste
m/uploads/attachment_data/file/590464/Fixing
_our_broken_housing_market_-
_print_ready_version.pdf
Audit Committee progress report and update – Mid Devon District Council
12© 2017 Grant Thornton UK LLP. All rights reserved.
Integrated Thinking and Reporting
Focusing on value creation in the
public sector
Grant Thornton has seconded staff to the International
Integrated Reporting Council on a pro bono basis for a
number of years.
They have been working on making the principles of
Integrated Reporting (IR) relevant to the public sector
and co-authored a recent report by CIPFA and the World
Bank: Integrated thinking and reporting: focusing on value creation
in the public sector - an introduction for leaders.
Around one third of global gross domestic product (GDP)
is made up by the public sector and this is being invested
in ensuring there is effective infrastructure, good
educational opportunities and reliable health care. In many
ways, it is this investment by the public sector that is
helping to create the conditions for wealth creation and
preparing the way for the success of this and future
generations.
Traditional reporting frameworks, focussed only on
historic financial information, are not fit-for-purpose for
modern, multi-dimensional public sector organisations.
Integrated Reporting supports sustainable development
and financial stability and enables public sector
organisations to broaden the conversation about the
services they provide and the value they create.
The public sector faces multiple challenges, including:
• Serving and being accountable to a wide stakeholder
base;
• Providing integrated services with sustainable
outcomes;
• Maintaining a longer-term perspective, whilst
delivering in the short term; and
• Demonstrating the sustainable value of services
provided beyond the financial.
The IR Framework is principle based and enables
organisations to tailor their reporting to reflect their own
thinking and strategies and to demonstrate they are
delivering the outcomes they were aiming for.
Integrated Reporting can help public sector organisations
deal with the above challenges by:
• Addressing diverse and often conflicting public
accountability requirements;
• Focussing on the internal and external consequences
of an organisation's activities;
• Looking beyond the 'now' to the 'near' and then the
'far';
• Considering the resources used other than just the
financial.
The report includes examples of how organisations have
benefitted from Integrated Reporting.
CIPFA Publications
Challenge question:
• Have you reviewed the CIPFA
guide to Integrated Reporting
in the public sector?
Grant Thornton
Audit Committee progress report and update – Mid Devon District Council
14© 2017 Grant Thornton UK LLP. All rights reserved.
Apprentice Levy-Are you prepared?What is the levy?
The UK has been struggling on productivity, now
estimated to be 20% behind the G7 average. Developing
apprenticeships is set to play a key part in tackling this and
bridging the skills gap.
Announced by government in July 2015, the levy is to
encourage employers to offer apprenticeships in meeting
their skill, workforce and training needs, developing talent
internally. The levy is designed to give more control to
employers, through direct access to training funds and
creation of apprenticeships through the Trailblazer
process.
What is the levy?
From April 2017, the way the government funds
apprenticeships in England is changing. Some employers
will be required to pay a new apprenticeship levy, and
there will be changes to the funding for apprenticeship
training for all employers.
All employers will receive an allowance of £15,000 to
offset against payment of the levy. This effectively means
that the levy will only be payable on paybill in excess of £3
million per year.
The levy will be payable through Pay As You Earn
(PAYE) and will be payable alongside income tax and
National Insurance.
Each employer will receive one allowance to offset against
their levy payment. There will be a connected persons rule,
similar the Employment Allowance connected persons
rule, so employers who operate multiple payrolls will only
be able to claim one allowance.
Employers in England are also able to get 'more out than they put
in', through an additional government top-up of 10% to their levy
contribution.
When employers want to spend above their total levy amount,
government will fund 90% of the cost for training and assessment
within the funding bands.
The existing funding model will continue until the levy comes into
effect May 2017. The levy will apply to employers across all sectors.
Paybill will be calculated based on total employee earnings subject
to Class1 National Insurance Contributions. It will not include
other payments such as benefits in kind. It will apply to total
employee earnings in respect of all employees.
What will the levy mean in practice
Employer of 250 employees, each with a gross salary of £20,000:
Paybill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x = £25,000
Allowance: £25,000 - £15,000 = £10,000 annual levy
How can I spend my levy funds?
The funding can only be used to fund training and assessment
under approved apprenticeship schemes. It cannot be used on
other costs associated with apprentices, including wages and
remuneration, or training spend for the wider-team.
Through the Digital Apprenticeship Service (DAS), set up by
government, employers will have access to their funding in the
form of digital vouchers to spend on training.
Training can be designed to suit the needs of your organisation and
the requirements of the individual in that role, in addition to
specified training for that apprenticeship. Training providers must
all be registered with the Skills Funding Agency (SFA).
What do I need to start
thinking about now?
• How much is the levy going
to cost and have we
budgeted for it?
• How do we ensure
compliance with the new
system?
• Which parts of my current
spend on training are
applicable to
apprenticeships?
• Are there opportunities to
mitigate additional cost
presented by the levy?
• How is training in my
organisation structured?
• How do we develop and
align to our workforce
development strategy
Grant Thornton update
Audit Committee progress report and update – Mid Devon District Council
15© 2017 Grant Thornton UK LLP. All rights reserved.
Off-payroll working and salary sacrificein the public sector
Off-payroll working
The Chancellor's Autumn Statement 2016 speech
delivered a number of changes that will impact the UK
business environment and raise considerations for you as
an employer.
In particular, the Chancellor announced that the measures
that were proposed in Budget 2016 that could affect
services supplied through personal service companies
(PSCs) to the public sector will be implemented.
At present, the so-called IR35 rules require the worker to
decide whether PAYE and NIC are due on the payments
made by a PSC following an engagement with a public
sector body. The onus will be moved to the payer from
April 2017. This might be the public sector body itself, but
is more likely to be an intermediary, or, if there is a supply
chain, to the party closest to the PSC.
The public sector body (or the party closest to the PSC)
will need to account for the tax and NIC and include
details in their RTI submission.
The existing IR35 rules will continue outside of public
sector engagements.
HMRC Digital Tool – will aid with determining whether
or not the intermediary rules apply to ensure of
“consistency, certainty and simplicity”.
When the proposals were originally made, the public
sector was defined as "those bodies that are subject to
the Freedom of Information rules". It is not known at
present whether this will be the final definition.
Establishing what bodies are caught is likely to be
difficult however the public sector is defined.
A further change will be that the 5% tax free allowance that is
given to PSCs will be removed for those providing services to the
public sector.
This will increase costs, move responsibility to the engager and
increase risks for the engager
Salary sacrifice
The Chancellor's Autumn Statement 2016 speech also introduced
changes to salary sacrifice arrangements. In particular, the
proposals from earlier this year to limit the tax and NIC advantages
from salary sacrifice arrangements in conjunction with benefits will
be implemented from April 2017.
Although we await the details, it appears that there is a partial
concession to calls made by Grant Thornton UK and others to
exempt the provision of cars from the new rules (to protect the car
industry). Therefore, the changes will apply to all benefits other
than pensions (including advice), childcare, Cycle to Work schemes
and ultra-low emission cars.
Arrangements in place before April 2017 for cars, accommodation
and school fees will be protected until April 2021, with others
being protected until April 2018.
These changes will be implemented from April 2017.
As you can see, there is a limited opportunity to continue with
salary sacrifice arrangements and a need also to consider the choice
between keeping such arrangements in place – which may still be
beneficial – or withdrawing from them.
Issues to consider
• Interim and temporary staff
engaged through an intermediary
or PSC
• Where using agencies ensure
they’re UK based and operating
PAYE
• Update on-boarding /
procurement systems, processes
and controls
• Additional take on checks and
staff training / communications
• Review of existing PSC
contractor population before
April 2017
• Consider moving long term
engagements onto payroll
• Review the benefits you offer -
particularly if you have a flex
renewal coming up
• Consider your overall Reward
and Benefit strategy
• Consider your Employee
communications
Grant Thornton update
Audit Committee progress report and update – Mid Devon District Council
16© 2017 Grant Thornton UK LLP. All rights reserved.
BrexitPlanning can help organisations
reduce the impact of Brexit
The High Court ruling that Parliament should have a say
before the UK invokes Article 50 of the Lisbon Treaty –
which triggers up to two years of formal EU withdrawal
talks – will not, in our view, impact on the final outcome.
There appears to be a general political consensus that
Brexit does mean Brexit, but we feel there could be
slippage beyond the original timetable which expected to
see the UK leave the EU by March 2019.
2017 elections in The Netherlands (March), France
(April/May), and Germany (October/November) will
complicate the Brexit negotiation process and timeline at a
time when Brexit is more important for the UK than it is
for the remaining 27 Member States.
The question still remains, what does Brexit look like?
While there may be acceptance among politicians that the
UK is leaving the EU, there is far from any agreement on
what our future relationship with the continent should be.
So, what do we expect based on what has happened so
far?
Existing EU legislation will remain in force
We expect that the Government will introduce a “Repeal
Act” (repealing the European Communities Act of 1972
that brought us into the EU) in early 2017.
As well as undoing our EU membership, this will
transpose existing EU regulations and legislation into UK
law. We welcome this recognition of the fact that so
much of UK law is based on EU rules and that trying to
unpick these would not only take many years but also
create additional uncertainty.
Taking back control is a priority
It appears that the top priority for government is 'taking
back control', specifically of the UK's borders. Ministers
have set out proposals ranging from reducing our
dependence on foreign doctors or cutting overseas
student numbers. The theme is clear: net migration must
fall.
Leaving the Single Market appears likely
The tone and substance of Government speeches on
Brexit, coupled with the wish for tighter controls on
immigration and regulation, suggest a future where the
UK enjoys a much more detached relationship with the
EU.
The UK wants a 'bespoke deal'. Given the rhetoric
coming from Europe, our view is that this would signal
an end to the UK's membership of the Single Market.
With seemingly no appetite to amend the four key
freedoms required for membership, the UK appears
headed for a so-called 'Hard Brexit'. It is possible that the
UK will seek a transitional arrangement, to give time to
negotiate the details of our future trading relationship.
This is of course, all subject to change, and, politics,
especially at the moment, moves quickly.
Where does this leave the public sector?
The Chancellor has acknowledged the effect this may
have on investment and signalled his intention to support
the economy, delaying plans to get the public finances
into surplus by 2019/20.
We expect that there will be some additional government
investment in 2017, with housing and infrastructure being
the most likely candidates.
Clarity is a long way off. However, public sector
organisations should be planning now for making a
success of a hard Brexit, with a focus on:
Grant Thornton update
Staffing – organisations should begin preparing for
possible restrictions on their ability to recruit migrant
workers and also recognise that the UK may be a less
attractive place for them to live and work. Non-UK
employees might benefit from a degree of reassurance as
our expectation is that those already here will be allowed to
stay. Employees on short term or rolling contracts might
find it more difficult to stay over time.
Financial viability – public sector bodies should plan
how they will overcome any potential shortfalls in funding
(e.g. grants, research funding or reduced student numbers).
Market volatility – for example pension fund and
charitable funds investments and future treasury
management considerations.
International collaboration – perhaps a joint venture or
PPP scheme with an overseas organisation or linked
research projects.
For regular updates on Brexit,
please see our website:
http://www.grantthornton.co.uk
/en/insights/brexit-planning-
the-future-shaping-the-debate
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